Choose the Best Coverage Options for Your Condominium

Condo owners have different insurance needs from renters or homeowners. Condo associations have insurance policies, but these policies only cover the building, the common areas of the property, and liability for the association. For this reason, owners need an insurance policy that protects the interior of their unit and their personal property from losses.

To understand what this type of plan covers, you first need to understand what the condo association insurance plan covers. The association should carry a policy that provides liability protection for accidents and injuries that occur in the common areas, coverage for the exterior of the building or buildings, and protection for the general property. The insurance policy of the association does not cover the contents of your home, property damage that occurs inside your home, or liability claims if someone is injured inside your home.

Additional Elements You Should Consider

Your plan will protect the contents and interior structure of your home. The policy will also provide liability coverage in the event that someone is injured inside your home. Commonly, insurers exclude flood and earthquake add-ons from a standard offering. Your policy may also exclude personal injury to the homeowner and business use for a home office. You should check with your insurer for the specifics of policy exclusions.

Replacement Cost: Reimburses you for the full cost of replacing your damaged or stolen personal belongings rather than the depreciated value of the items. This add-on is more expensive but will allow you to purchase new-model replacements for your possessions.

Personal Property Floater: If you have very valuable items, such as jewelry, furs, collections, etc., a standard policy probably won't provide full protection for them. In this case, you might want to consider a personal property floater to increase your limits for these items.

Discounts: You can get many of the same discounts on policies that are available for homeowner's policies. For example, you might receive discounted premiums for smoke detectors, anti-theft alarms, and multiple policies.

Flood & Earthquake Insurance: If you live in a flood zone or an area prone to earthquakes, you might consider adding these options to your policy.

Saving Money While Maximizing Protection

As a condo owner, you need to protect your investment, but many people don't know how to go about finding the best rates available. You could be spending entirely too much for your protection without knowing it. Because many insurance providers cater to online customers, the Internet is a great resource for both detailed information and cheaper policies. And it's much faster and simpler than you might imagine.

When you go grocery shopping you'll find multiple options for any given item, but they aren't exactly the same. And the price is certainly different. The same holds true for this type of plan. Too many people end up paying more than they need to because they failed to compare offers. You should visit the numerous insurers' websites and get quotes from each one. Once you've done this, you can weigh the offers against one another and decide which will save you the most money while giving you the peace of mind you desire. The first quote is rarely the best one, so make sure that you don't cut your search short.

Additional Considerations

When you live in a condo, you own your individual unit and share collective ownership of the rest of the complex with others. This means that owners have a collective responsibility to insure the common areas, such as the pool, hallways, building exteriors, etc., and the association collects monthly dues to pay for this safeguard. Your master policy should explicitly say what areas of the complex are and are not insured by association dues.

Remember that you only have to insure the structural items for which your condo association's master policy holds you responsible. Your association will usually have commercial insurance for shared building and common areas. These policies come with an association deductible. Thus, if a disaster struck your complex, this deductible would be split among the unit owners. This is not a major concern if the deductible is only $5,000, but some deductibles can range up to $50,000.

After you know what parts of your condo you must insure on your own, you need to decide on how much coverage is appropriate. To estimate the amount you need, pay attention to how much other unit owners are paying for recent upgrades, such as new cabinets, flooring, or countertops. You might also take about half the market value for interior structures to estimate your needs. When getting a plan, you need to get protection for both your personal belongings and the actual structure of the building.

Cash Value vs. Replacement Cost

The difference between these two options is massive in some cases. Cash value coverage reimburses you only for the present cash value of the item less depreciation. Replacement cost coverage reimburses you for what it would cost to replace the item with a new model. For instance, if you lost a TV that was three years old, a cash value policy would only give you what the TV is worth today, which might be next to nothing. A replacement cost policy would pay for you to buy a new model.